Importance of Communication in Insolvency Proceedings: NCLT Halts IBBI Enquiry

The National Company Law Tribunal, New Delhi, addressed issues surrounding the appointment of an Interim Resolution Professional (IRP) without proper intimation, leading to a lack of communication and the inability to commence the Corporate Insolvency Resolution Process (CIRP). The IRP requested to set aside an order and recall an enquiry by the Insolvency and Bankruptcy Board of India (IBBI) due to lack of intimation and involvement in the proceedings. The Tribunal emphasized the importance of proper communication in insolvency proceedings, halting any ongoing enquiry by IBBI until further orders to ensure fair proceedings and adherence to due process.

---

---

Issues: Appointment of Interim Resolution Professional (IRP) without proper intimation, failure to commence Corporate Insolvency Resolution Process (CIRP), lack of communication between parties, request for setting aside an order and recalling an enquiry by the Insolvency and Bankruptcy Board of India (IBBI).

In the judgment delivered by the National Company Law Tribunal, New Delhi, the issue at hand revolved around the appointment of the IRP without proper intimation. The IRP, appointed via an order dated 20.03.2020, claimed that there was no communication regarding the appointment from the Registry, Operational Creditor, or Corporate Debtor. Consequently, the Corporate Debtor proceeded ex parte, necessitating the IRP to take up duties without prior notice. The IRP's counsel highlighted the lack of intimation received, leading to the inability to commence the CIRP. Additionally, the Operational Creditor had filed an application for the replacement of the IRP, which was not allowed, but an enquiry against the IRP was directed by IBBI. The IRP's counsel emphasized being unaware of the proceedings, as the Operational Creditor's application was not served on him. Therefore, the IRP requested to set aside the order dated 06.07.2021 and recall the IBBI's enquiry. On the other hand, the Operational Creditor claimed to have received the application copy but presumed the Registry would inform the IRP. However, the IRP's inaction resulted in the non-deposit of a sum of Rs. 2,00,000. The Tribunal directed IBBI to refrain from initiating any enquiry until further orders, halting any ongoing enquiry until instructed otherwise.

The Tribunal scheduled a hearing for various applications, including IA No. 1346/ND/2021, IA NO. 3253/ND/2021, and another application by the Operational Creditor, IA No. 190/ND/2021, seeking rectification of the order dated 06.07.2021. The judgment emphasized the importance of proper communication and intimation in insolvency proceedings to ensure the efficient functioning of the CIRP. It highlighted the responsibilities of all parties involved, including the IRP, Operational Creditor, and Registry, in facilitating a smooth resolution process. The decision to halt any ongoing enquiry by IBBI showcased the Tribunal's commitment to fair proceedings and adherence to due process. The case underscored the significance of timely communication and active participation to avoid delays and confusion in insolvency matters.

---